LeoGlossary: Technical Analysis (TA)
The forecasting of future price moves based upon the historical performance. This is done by the charting out of the movements of an asset over a period of time.
It is a way for both traders and investors to evaluate different financial instruments. Technical analysis can be used with:
Unlike fundamental analysis, this method is only concerned with the data regarding the market activity. Things such as industry, profit, supply/demand, and any other factors are ignored. The only factors that matter are the signs provides by the indicators used to forecast future pricing.
The belief is that markets are cyclical, often repeating themselves. This is compounded by the fact that automated trading is so prevalent today with computers making up most of the volume.
Some consider this akin to Voodoo or Astrology. These individuals feel that historic price action is no indicator of what markets will do in the future.
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